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We Have Assisted in the Startup of Some of the Most Successful E-Commerce and Electronic Entertainment Companies in the World

Ira P. RothkenIn addition to our robust litigation practice we assist electronic entertainment, high technology, and e-commerce companies in their business, startup, and legal transactions. For example, since the inception of the "commercialized" internet in the mid 1990s, we have represented some of the largest and most successful web sites in the world on a huge range of matters from startup issues to risk reduction strategies to e-commerce policies and agreements. In many instances we were called upon to handle issues where there was no clear precedent and thus we had to innovate a solution.

We have also helped start numerous successful electronic entertainment and videogame companies including Nihilistic Software, Pandemic Games, Telltale, and Arenanet. Ira P. Rothken, a member of IGDA, has spoken multiple times on how to start a videogame development company at the Computer Game Developers Conference (CGDC). Here is a sample of videogame development transactions in which we assisted our clients:

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Some five dozen iPhone customers have filed at least 59 separate lawsuits since December accusing Apple of slowing their phones to spur people to buy new iPhones....

Apple settled... [a previous] class-action lawsuit in 2012, agreeing to either pay iPhone 4 owners $15 or give them a free case, according to Ira Rothken, an attorney who represented the plaintiffs. The total potential settlement amount was $315 million...

...Plus, a decision against Apple could require it and other tech companies to be more transparent about how their software or hardware features affect power or performance, said Mr. Rothken, who isn’t involved in this legal action. For years, companies have been able to avoid such disclosures, mainly because customers haven’t demanded them.

Kim Dotcom and Mona Dotcom announce that they have resolved their lawsuit against the New Zealand Police in which the Dotcoms sought a remedy for their claim about the unreasonable use of force in the military-style raid of their family home in January of 2012. The Dotcoms also raised the concern that their home and family had been under intrusive visual surveillance by the Police which had not been authorised by the Court.

The complaint arose from events occurring in the early morning of January 20, 2012, when 72 police officers including the heavily armed Special Tactics Group (STG) and the Armed Offenders Squad (AOS) descended on the Dotcoms’ family home in Coatesville to make a number of arrests at the request of the United States in an Internet copyright matter. Landing two helicopters just outside the family home, the entry team sprang to action, wielding M4 Bushmaster rifles.

The forces entered the Dotcom home and held the Dotcom family, staff and guests at gunpoint. The officers caused considerable damage to the Dotcom property as they stormed through the house, around the grounds and over the roof. Mona Dotcom, who was 7 months pregnant with twins, and the Dotcom children were traumatised. Neither the Dotcoms nor their guests were allowed to talk to each other or their lawyers for an unreasonable period.

The United States’ basis for the raid, online copyright infringement, is not even a crime in New Zealand.

The lawsuit against the New Zealand Police sought an acknowledgment of the harm caused to the Dotcom family, including the children, Mona and Kim...

In Sbeih (the lead opinion), the Sixth Circuit has vacated and remanded the Northern District of Ohio’s ruling that Sbeih is a fugitive who has requisite intent to avoid prosecution. Sbeih, 2017 WL 3612006, at *1. While purporting to align itself with the Fourth, Second and Ninth Circuits (contra the D.C. Circuit) on the substantive standard governing fugitive disentitlement (the Third Question Presented), the Sixth Circuit actually adopted a position peculiar to it—vacating application of fugitive disentitlement on facts indistinguishable from those the courts below found sufficient to disentitle these Petitioners and espousing a higher burden the Government should face. As to the procedural standard (the Second Question Presented), the Sixth Circuit took pains to instruct the district court that it must develop a fulsome evidentiary record well beyond that adduced in Petitioners’ case, which was decided based on papers alone. As elaborated below, the Sixth Circuit has thus illustrated the need for this Court to bring clarity and uniformity to the procedural and substantive standards governing fugitive disentitlement.

While opposing review, the Government barely engages the circuit splits and constitutional concerns Petitioners identify. If ever the views of the United States should be discounted, it is in the context of civil forfeiture and fugitive disentitlement. Here, the United States has a vested financial stake in forestalling review and preserving the prevailing regime. See Brief of Amici Curiae Institute for Justice, et al. (“IJ Br.”), at 4–5, 7–15. The Government today is relatively unconstrained in pursuing forfeiture of assets abroad, and circuits are in disarray as to the bounds of fugitive disentitlement. This Court should clarify the jurisdictional, procedural and substantive parameters governing civil forfeiture.

The First Question Presented implicates essential jurisdictional limits. The circuits disagree about those limits, with the Second Circuit standing apart in applying “traditional” rules demanding control of property to constrain all in rem proceedings, notwithstanding 28 U.S.C. § 1355. That foreign courts have yet to enforce the forfeiture order and have expressed doubts about ever enforcing it (Petition for a Writ of Certiorari (“Pet.”) 18–19) heightens concern that it is an unconstitutional advisory opinion.

As to the Second Question Presented, the procedures governing fugitive disentitlement have occasioned sharp splits. Although the Government now doubts preservation (Brief for the United States in Opposition (“Opp.”) 26), it had no such doubt below, pointedly engaging the issue and citing its side of the on-point circuit split. See Supplemental Appendix (“Supp.”) 5a–8a. When the Fourth Circuit opted to review factual findings derived at the pleading stage only for “clear error” (36a), it joined those circuits holding that disentitlement and related factual disputes may be decided on pleadings alone. The D.C. Circuit and Sixth Circuit diverge, however, insisting that resolution of disputed facts await summary judgment, at which point non- movants still deserve all reasonable inferences.

Finally, the Third Question Presented has further fractured the circuits. While favoring the Second and Fourth Circuit’s “specific intent” standard for fugitive status, the Government blinks reality when denying that the D.C., Fifth, Sixth, and Ninth Circuits substantively differ. Lest there be any doubt, the Second Circuit (which the Fourth followed) has “respectfully disagree[d]” with the D.C. Circuit (as later followed by the Sixth). United States v. Technodyne LLC, 753 F.3d 368, 371, 384–85 (2d Cir. 2014).

Any principled view of fugitive disentitlement has been abandoned in this case. Cf. Degen v. United States, 517 U.S. 820, 828 (1996) (noting due-process question); Niemi v. Lasshofer, 728 F.3d 1252, 1255– 57 (10th Cir. 2013) (Gorsuch, J.) (expressing qualms); IJ Br. 20–26. Far from being directed towards persons who have fled or avoided our country while claiming assets in it, fugitive disentitlement is being used offensively to strip foreigners of their assets abroad. Contrary to the Fourth Circuit’s view, the mere fact that a defendant simultaneously contests extradition and forfeiture of his foreign assets should not suffice to disentitle him as a “fugitive.”

These Questions Presented build upon those the Court recently answered to invalidate criminal imposition of fines against innocent persons and forfeiture of untainted property. See Nelson v. Colorado, 137 S. Ct. 1249 (2017); Honeycutt v. United States, 137 S. Ct. ---- (2017). Absent review, forfeiture of tens of millions of dollars will be a fait accompli without the merits being reached. This is especially disconcerting because the Government’s criminal case is so dubious. When the Government characterizes Petitioners as “designing and profiting from a system that facilitated wide-scale copyright infringement,” (Opp. 5), it continues to paint a portrait of secondary copyright infringement, which is not a crime. See Pet. 5 & n.3. If this stands, the Government can weaponize fugitive disentitlement in order to claim assets abroad.

It is time for the Court to speak to the Questions Presented. Over the past two decades it has never had a better vehicle to do so, nor is any such vehicle elsewhere in sight.

"Amici are deeply troubled by the Fourth Circuit’s expansion of federal forfeiture beyond its historical justifications and practice, particularly in light of the direct financial interest that inures to the government. This case offers a good vehicle for this Court to begin limiting civil forfeiture to its historical justifications."

Below is a summary from the Amicus brief - you can read the full brief here.

SUMMARY OF ARGUMENT

As this Court has consistently recognized, con- stitutional protections must be at their apex when the government stands to financially benefit from its actions. The Fourth Circuit’s decision turns this principle on its head – disregarding essential constitutional safeguards like jurisdiction and due process because the government has sought to take property using civil rather than criminal forfeiture. This Court should grant certiorari to clarify that the Constitution does not have a “civil forfeiture” exception.

This case involves civil forfeiture of alleged proceeds from secondary copyright infringement (or the encouraging of others to infringe copyright) – a novel and untested theory of liability not expressly contemplated by the criminal copyright infringement statute. Because the Justice Department is allowed to keep and use the forfeited assets, courts must be especially vigilant to ensure that the forfeiture complied with constitutional requirements. Despite the government’s significant financial incentive in reaping the proceeds of civil forfeiture, the Fourth Circuit dangerously expanded in rem jurisdiction to property not within the control of the district court while denying overseas property owners a meaningful opportunity to contest forfeiture of their property.

This case illustrates the degree to which civil forfeiture has come unmoored from its historical origins and how the doctrine’s devolution now threatens fundamental rights. The petition presents an important opportunity for this Court to begin limiting civil forfeiture to its historical origins, and thereby restore the constitutional protections that its modern application has placed in jeopardy.

At the time of the Founding, civil forfeiture was justified by the necessity of obtaining “in rem” jurisdiction over property located in the United States – typically ships involved in smuggling – because the person responsible for the crime was overseas and therefore beyond the jurisdiction of United States courts. Today, civil forfeiture is often used to take property even when its owner is within the court’s jurisdiction and could be subjected to criminal prosecution. The Fourth Circuit’s ruling, however, expands a court’s power to civilly forfeit property even further, to cases where the property is not even located within the court’s jurisdiction. If the government can proceed “in rem” in a case where it does not even have control over the res, then the “in rem” doctrine has lost all meaning.

This aggrandizement of the federal government’s forfeiture powers necessarily expands the scope of financial incentives available to law enforcement, as vividly demonstrated by this case. Here, the Fourth Circuit affirmed the forfeiture of up to $175 million worth of assets from seven, non-U.S. citizens living outside the United States through an action brought in rem against those assets – even though none of these assets are under the control of U.S. courts.

Compounding this redefining expansion of in rem jurisdiction, the Fourth Circuit extended the so-called “fugitive disentitlement” doctrine, ruling that because these foreign property owners insist on their right to contest extradition and decline to come to the United States (leaving their families, work, and their entire lives, for months, perhaps years) without a court order, they may be deemed “fugitives” and consequently “disentitled” from even asserting a claim to their own property. If left to stand, the Fourth Circuit’s decision ratifies the ability of the United States to arbitrarily deem foreign residents “fugitives” and take their prop- erty without providing any meaningful opportunity to defend against the forfeiture of their property on either procedural or substantive grounds. Entering default forfeiture orders against international claimants – who are not fleeing justice but lawfully are staying in their home countries – both contravenes historical practice and violates due process.

Despite the Fourth Circuit’s radical departure from historical practice, the United States has heavily relied on the decision below in seven pending cases across the country. This Court should accept review to safeguard constitutional rights that civil forfeiture has placed in jeopardy.

Ira P. Rothken, founder of the Rothken Law Firm, has written for the Home Office Computing/Small Business Computing Magazine "Legal Matters" Column. Mr. Rothken has written numerous articles on protecting small businesses and the laws of "e-commerce." Mr. Rothken has appeared as a guest legal expert on television and radio including CNNfn (fax/e-mail marketing issues), CNN (internet gambling), Bloomberg (internet copyright law), CNN (internet privacy), KQED radio (computer keyboard injuries), FOX (internet gambling), NBC (internet copyright), CBS (internet privacy), CNET radio (internet copyright), KTVU Silicon Valley Business Report (software license agreements), TechTV (internet law), CNBC (internet copyright law), and Court TV (internet gambling issues and copyright litigation), and has been quoted in numerous publications including legal newsletters, newspapers (Wall Street Journal, NY Times, San Jose Mercury News, San Francisco Chronicle, Newsday), magazines, and law review articles. In addition, Mr. Rothken has spoken at numerous conferences and seminars on internet & e-commerce law including the IAEM Convention, the Computer Game Developers Conference (CGDC), the Annual Meeting of the Free Speech Coalition, the Recorder Legal Newspaper Roundtable, the Practicing Law Institute in San Francisco, California, the Sedona Conference, and the Privacy and American Business Conference in Washington, DC.